Answer: $412,292
Explanation:
First compute Overhead Absorption Rate = Budgeted Overhead divided by Budgeted Activity Level
In this question the activity level is Direct Labour Hours (DLH) which is the basis for allocating overhead.
budgeted factory overhead for the year at $453,120, and budgeted direct labor hours for the year are 384,000.
$453,120 divided by 384,000 DLH =$1.18
Overheard to be allocated for May is OAR * Actual Activity level
$1.18*349400= $412,292
This is the amount to be allocated to may
Answer:
$492,292
Explanation:
Given:
Budgeted overhead=$453,120
Budgeted direct labour hours=384,000
Actual labour hours for may=349,400
Solution
Overhead absorption rate=Budgeted overhead/budgeted direct labour hours
Overhead absorption rate=$453,120/384,000
=$1.18
Overhead allocation for may= overhead absorption rate× actual labour hours for may
Overhead allocation for may=$1.18 × 349,400
= $492,292
